The name “mandi” (and the former name “Mandav Nagar”) has its roots from Great Sage Rishi ‘Mandav’ who prayed in this area, and the rocks turned black due to the severity of his penance. Alternatively, the name may have been derived from the common word mandi which means “market” in Hindi. It may possibly be connected with the Sanskrit root mandaptika, meaning “an open hall or shed,”.
While the city’s name has always been pronounced in the local language, the anglicized version “Mandav Nagar” was the official name until it was changed to “Mandi”. This change is now the most widely used name for the city. Mandi is renowned for its 81 ancient old stone Shaivite temples and their enormous range of fine carving. Because of this, it is also often called the “Varanasi of the Hills”.
Princely state of Mandi was founded by Bahu Sen in 1200 AD. But Ajbar Sen was the one who founded historical city of Mandi in 1526 AD. The present District of Mandi was formed with the merger of two princely states Mandi State and Suket (Sundernagar) on the 15 April 1948, when the State of Himachal Pradesh was established. Ajbar Sen assassinated Mandi, it led to beginning of modern period of Mandi history. Old Mandi capital was abandoned and the site of present capital was acquired. Some historians put the selection of present capital in the year 1527 AD. The idol of Madho Rai, the presiding deity of Mandi and incarnation of Lord Vishnu is said to be made by Goldsmith Bhima, in 1648. Maharaja Ranjit Singh occupied Mandi in 1839 but Ranjit Singh died on 27 June 1839. It was beginning of disintegration of Sikh powers in the hills and British power emerged as most powerful.